DISPUTES RELATING TO CARRIAGE OF GOODS. Sessi… · 2 Carrier Laws • The Carriers Act, 1865 (Repealed by The Carriage by Road Act, 2007) • The Carriage by Road Act, 2007 • The

DISPUTES RELATING TO

CARRIAGE OF GOODS

Presented By

Anand Desai

Managing Partner

DSK Legal

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Carrier Laws

• The Carriers Act, 1865 (Repealed by The Carriage by Road Act, 2007)

• The Carriage by Road Act, 2007

• The Indian Carriage of Goods by Sea Act, 1925

• The Carriage by Air Act, 1972

• The Multimodal Transportation of Goods Act, 1993

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The Carriers Act, 1865

Salient Features:

• This Act was the first statutory enactment in India for common carriers.

• Rights and liabilities of a common carrier were defined under the Act.

• The Act enabled a common carrier to limit his liability by a special contract if hechose to do so, except in case of loss caused by a criminal act, negligence ormisconduct. Else, his liability was absolute as an insurer to the extent of valueof goods of Rs. 100, and above that if a higher value was declared by theconsignor.

• No suit could be filed against a common carrier for loss, unless notice in writingwas given to him within six months of loss or injury being known.

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Liability of a carrier

Tata Chemicals Ltd. vs. Skypak Couriers Pvt. Ltd. (2002) CPJ 24 (NC)

• Issue: What is the value and effect of small print on the consignmentnote?

• Held: A condition in a contract, limiting the liability of one party,though signed by both parties must be construed strictly. The smalland fine print should be clearly discernible and should draw thepointed attention of the consumer.

• Such a term could be in bold print and it should be easily readable sothat a consumer can read and understand it. A condition in small printwould amount to communication only when the attention of theconsumer is specifically drawn to it.

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Liability of a carrier (Cont.)

Patel Roadways vs. Birla Yamaha Ltd., AIR 2000 SC 1461

• It is clear that the liability of a common carrier under the Carriers Actis that of an insurer.

• In a case of claim of damage for loss to, or deterioration of goodsentrusted to a carrier it is not necessary for the plaintiff to establishnegligence.

• Even assuming that the general principle in cases of tortious liability isthat the party who alleges negligence against the other must provethe same, the said principle has no application to a case coveredunder the Carriers Act.

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A.S. Navigation Co. vs. Jethala AIR 1959 Cal 479

• Facts: The whole consignment of tobacco was reduced to a charredmass by spontaneous combustion caused by the presence of waterand moisture in the tobacco.

• Held: The effective and proximate cause of the damage was found tobe due to the careless and negligent stowing of the goods by thecarrier and the carrier was held liable for the loss.

• If the loss or damage arises from the neglect, fault or failure in theduties and obligations as provided in the statutory Articles or rulesthen a clause in the bill of lading exempting the carrier from liabilityfor such loss and damage would be null and void and of no effect.

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Limited liability of a carrier

Bharathi Knitting Co. vs. DHL Worldwide Express Courier (1996) 4SCC 704

• Issue: The Supreme Court was called upon to decide the possibility ofawarding damages in excess of the agreed limitation of liability of thecarrier under the contract.

• Held: The parties having agreed to the terms restricting the liability ofthe carrier, are bound by the same.

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The Carriage By Road Act, 2007

Salient Features of The Act and Rules:

• In order to cope with the pace of modern development of road transport,The Carriage by Road Act, 2007 was enacted on September 29, 2007.

• The Act :

(a) Provides for registration of common carriers;

(b) Provides for execution of a goods forwarding note which describesgoods, and goods receipt;

(c) Allows limits of liability of common carriers, except in case of losscaused by criminal act;

(d) Provides that consignor/consignee need not prove negligence;

(d) Regulates the carriage of dangerous and hazardous goods;

(e) Provides that no suit can be filed against a common carrier for loss,unless notice in writing is given within 180 days from date of bookingof the consignment.

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New definition under the Carriage byRoad Act, 2007

• Common Carrier: means a person engaged in the business ofcollecting, storing, forwarding or distributing goods to be carried bygoods carriages under a goods receipt or transporting for hire ofgoods from place to place by motorised transport on road, for allpersons un-discriminatingly and includes a goods booking company,contractor, agent, broker and courier agency engaged in the door-to-door transportation of documents, goods or articles utilising theservices of a person, either directly or indirectly, to carry oraccompany such documents, goods or articles, but does not includethe Government;

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Maharashtra State Electricity Board vs. P.B. Salunke AIR 2009 Bom185

• Facts: A transformer was damaged during transit by toppling downfrom the trailer. The vehicle carrying the transformer, had inadequatecarrying capacity compared to the weight of the transformer.

• Held: The transporter was negligent in handling the transformer andwas liable to pay damages.

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Nagpur Golden Transport Co. vs. Nath Traders AIR 2012 SC 357

• Issue: Would a common carrier be entitled to the damaged goodsafter paying for the damage caused during transportation?

• Held: The common carrier would be entitled to the value of thedamaged goods, else the consignee would stand unjustly enriched.

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Brakes India Ltd. & Ors. vs. BIC Logistics Ltd. O.S.A. No. 329 of2010 (Mad HC)

• Issue: Liability of the carrier to pay compensation in the saidcircumstances

• Facts: The Plaintiff has entrusted certain automobile spare parts tothe Defendant, who is a public carrier to be transported toJamshedpur. The spare parts were not received on account of themurder of the driver and the cleaner of the container.

• Held: On consideration of the evidence on record, it was held that theDefendant was not liable to pay the amount claimed in the suit, as perClause 17 of the Carriage by Road Act, 2007, i.e. if a loss has beenoccasioned by a public enemy, the common carrier is not liable.

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The Indian Carriage of Goods by SeaAct, 1925


• The Indian Carriage of Goods by Sea Act, 1925 was passed toestablish the responsibilities, liabilities, rights and amenities of acarrier covered by the bill of lading.

• It applies to ships carrying goods from any port in India.

• No implied contract of seaworthiness of vessel, subject to diligence ofcarrier as to seaworthiness – but proof to be by carrier.

• Notice of loss or damage to be given at the time of taken delivery atdestination, or within 3 days of delivery if damage is not apparent.

• Suit to be brought within one year after delivery of goods, or date ofdelivery, or within an additional 3 months if allowed by Court, unlessparties agree to a longer period.

• No exclusion of liability permitted for negligence, fault or failure induties and obligations of carrier.

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Applicability of the Act

Shipping Corpn. of India Ltd. v. Bharat Earth Movers Ltd., (2008) 2SCC 79

• Issue: The applicability of the Indian Carriage of Goods by Sea Act, 1925 vis-à-vis the Japanese Carriage of Goods by Sea Act, 1992.

• Held: A bare perusal of Section 2 of the Act, demonstrates that the sameapplies to the carriage of goods by sea in ships carrying goods from any port inIndia to any other port whether in or outside India.

• Thus, the Indian Act shall apply only when the carriage of goods by sea inships, takes place from a port situated within India and not a port outsideIndia.

• The Japanese Carriage of Goods by Sea Act, 1992 would govern the contract.

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Applicability of the Act (Cont.)

British India Steam Navigation Co. Ltd. v. ShanmughavilasCashew Industries, (1990) 3 SCC 481

• Issue: Whether Indian law would be applicable in case of disputespertaining to goods shipped from ports outside India?

• Held: For the application of Indian law, the port of origin has to be anIndian Port. Goods shipped from Africa and carried to Cochin, will notbe governed by India law.

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Contship Container Lines Ltd. & Co. Ltd. vs. D.K. Lall AIR 2010 SC1704

• Facts: There was a charter-party agreement between the buyer andcarrier. The contract made the charterer responsible to pay demurragein case of delay. The dispute arose over the payment of demurrage.

• Held: The delivery of the Bill of Lading was delayed by the agent ofthe carrier. The agent of the carrier was guilty of breach of hisstatutory duty and negligence. The agent of the carrier, jointly withthe ship-owner was liable to pay damages to the seller.

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M/s. Jeeves Impex vs. Maersk Line India Pvt. Ltd.

• Facts: Plaintiff did not received the amounts payable on the goods.Defendant No. 2 was to route the payment to the Plaintiff through theDefendant No. 2’s bank. Defendant No. 2 was also supposed toreceive goods in exchange of the original Bills of Lading fromDefendant No. 1. The good were ultimately received by Defendant No.2 but no payment was received by the Plaintiff and Defendant no 3.

• Issue: Claims of invoice and damages for an export transaction basedon an alleged oral contract between the Plaintiff and Defendant No 1.

• Held: The Plaintiff failed to produce any evidence concerning itscontract with Defendant No. 2. Plaintiff’s claim against Defendant No.1 for recovery of the balance of its invoice value is invalid andtherefore, Defendant No. 1 cannot be held liable.

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Bill of Lading

• A Bill of Lading is the symbol of the goods, and the right to possessthose passes to the transferee of the bill of lading.

• The transfer is symbolic of the transfer of the goods themselves anduntil the goods have been delivered, the delivery of the duly endorsedBill of Lading operates as between the transferor or transferee, and allwho claim through them, as a physical delivery of the goods would do.

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Bill of Lading

Ellerman & Bucknall Steamship Co. Ltd. v. Sha Misrimal Bheraji,AIR 1966 SC 1892

• A bill of lading serves three purposes:

1.it is a receipt for the goods shipped containing the terms on which theyhave been received;

2.it is evidence of the contract for carriage of goods; and

3.it is a document of title for the goods specified therein.

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Bill of Lading (Cont.)

British India Steam Navigation Co. Ltd. v. Shanmughavilas CashewIndustries, (1990) 3 SCC 481

• A bill of lading is not a negotiable instrument in the strict sense of thetransferee deriving better title than the transferor. The transferee of abill of lading gets no better title than the transferor himself had.

• A bill of lading is intended to provide for the rights and liabilities of theparties arising out of the contract of affreightment. If the consigneeclaims the goods under a bill of lading he is bound by its terms. Itcannot be said that the shipper, did not know of the conditions ofcarriage printed on the reverse.

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Bill of Lading (Cont.)

Shipping Corpn. of India Ltd. v. Bharat Earth Movers Ltd., (2008) 2SCC 79

• Invoice is not a part of the Bill of Lading. The value of the goods isrequired to be stated on the Bill of Lading so as to enable the shippingconcern to calculate the quantum of freight. It cannot, in absence ofany statutory provisions, be held to be incorporated therein bynecessary implication or otherwise.

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Carriage by Air Act, 1972


• Gives effect to international conventions – Warsaw 1929 and Montreal1999.

• Documents involved – passenger ticket, luggage ticket, airconsignment note. These may include exclusion from liability.

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Carriage by Air (Amendment) Act,2016 Amendment made to Section 4A of the Carriage By Air Act,

1972:

• The Central Government may, having regard to the objects of the Act,and if it considers necessary or expedient so to do, by notification inthe Official Gazette, give effect to the limits of liability, revised bythe depository under rule 24 of Chapter III of the Third Schedule tothis Act, for the purposes of determining the liabilities of the carriersand extent of compensation for damages under the said Chapter ofthat Schedule.

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Anil & Co. vs. Air India AIR 1986 Del 312

• Facts: The Plaintiff booked certain goods with Air India for carriage toNew York. The New York Banker was named as the consignee in theairway bill. Air India carried goods to Paris and entrusted the carriageof the said goods to Trans World Airlines for delivery to New York.Trans World Air Lines wrongly delivered the goods.

• Held: Air India was liable for the value of the goods as theconsignment was negligently and without authority delivered by theTrans World Airlines.

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Gujarat Urja Vikas Nigam ltd. vs. Air India Ltd. 2009(2) C.P.J. 378

• Facts: The complainant’s goods ordered from London weretransferred by air. At the time of taking delivery, Air India stated thatthe goods were mishandled or were missing. The goods were laterfound to be auctioned and subsequently purchased.

• Held: As there was gross and wilful negligence on the Port of AirIndia, the deficiency in service was apparent. Complainant was held tobe entitled to the full value of goods with interest, and costs.

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Ethiopian Airlines vs. Ganesh Narain Saboo (2011) 8 SCC 539

• Issue: A 3 judge bench of the Supreme Court was asked to determine whetherEthiopian Airlines would be governed by the Carriage by Air Act, 1972

• Held: According to Indian Law, Ethiopian Airlines can be subjected to a suitunder the Carriage by Air Act, 1972.

• Ethiopian Airlines must be held accountable for the contractual and commercialactivities and obligations that it undertakes in India.

• Countries who participated in trade, commerce and business with differentcountries ought to be subjected to normal rules of the market.

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Virendra Khullar vs. American Consolidation Services Ltd. & Ors. I(2004) CPJ 73 NC

• Facts: The appellants had entrusted consignments of men’s wear apparels into Respondent No.1. In the Bill of Lading issued by the shipping carriers, nameof consignee was changed from Central Fidelity Bank to Coronet Group Inc.,amongst several other changes. The Appellant filed a complaint for the cartonssent through cargo.

• Respondent No. 1 contested the complaint and pleaded that no payment wasmade for services provided and the receipt, custody and forwarding of thegoods of the complainants were governed by the bailment agreement, whichstated that after the delivery by Respondent No.1, the liability for the care,custody, carriage and delivery of goods was of that concerned carrier.

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Virendra Khullar vs. American Consolidation Services Ltd. & Ors. I(2004) CPJ 73 NC

• Issue: Respondent No.1’s plea is that it acted only as a consolidator and not acarrier and therefore, it cannot be held liable in a case of negligent act orcarelessness while handling of the shipment

• Held: The Honb’le Supreme Court held and accepted the plea of RespondentNo. 1 and also held that Respondent No. 2, i.e. the bank cannot be held liablefor the deficiency of service, as the amount was not collected from theconsignee.

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Insurance

Namrata Singh & Ors. vs. DGCA & Ors. WP(C) 1867/2012 (Del HC)

• Issue: Whether or not the crew was covered under the insurancepolicy?

• Facts: Respondent 3 lent his aircraft for enabling a medicalevacuation of a critically ill patient in Patna. The aircraft encountered athunderstorm and crashed over Parvatia Colony in Faridabad, whichresulted in the death of all the occupants on board. It also resulted inthe death of three persons on the ground and damage to immovableproperty. A legal notice for claims was sent by the petitioners and inresponse respondent no 3 denied its liability.

• Held: The UICL was made to payments of monetary sums along withinterest to the Petitioners.

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Airway bill

Dilawari Exporters vs. Alitalia Cargo (2010) 5 SCC 754

• As regards to a contract for carriage of goods by air, an air waybill isprima facie evidence of conclusion of contract, of the receipt of thecargo, and of the conditions of carriage.

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The Multimodal Transportation of GoodsAct, 1993


• Carriage of goods may be executed by sea, air or land or by a combinationof more than one. A carriage by one of the said modes is termed unimodaland a carriage carried out by a combination of two or more, is calledmultimodal transport.

• The Act provides for the regulation of multimodal transportation of goodsfrom India to outside India.

• Requires registration to carry on such business.

• Requires issuance of a negotiable or non-negotiable multimodal transportdocument as a document of title.

• Consignor must make disclosures as required, and indemnifies operatoragainst loss resulting from inadequacy or inaccuracy of disclosures.

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• Provides for assessment of compensation for loss or damage toconsignment.

• Notice of loss or damage to be given at the time of taken delivery atdestination, or within 3 days of delivery if damage is not apparent.

• Suit to be brought within one year after delivery of goods, or date ofdelivery, or within an additional 3 months if allowed by Court, unlessparties agree to a longer period.

• No exclusion of liability permitted for negligence, fault or failure induties and obligations of carrier.

• the Multimodal Transport Operator shall not be liable if he proves thatno fault or neglect on his part had contributed to such loss, damage ordelay in delivery.

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Limitation on action:

• The Act restricts any action of liability against the carrier if such actionis not brought within nine months from:

(a) the date of delivery of the goods, or

(b) the date when the goods should have been delivered, or

(c) the date on and from which the party entitled to receivedelivery of the goods has the right to treat the goods as lostunder sub-section (2) of section 13.

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